Greetings, and welcome to the Aurora Cannabis Second Quarter 2022 Results Conference Call. At this time, all participants will be in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded. I would now like to turn the conference over to your host, Ananth Krishnan, Vice President, Strategic Finance. Thank you. You may begin.

Thank you, Diego, and we appreciate you all for joining us this afternoon. With me today are CEO Miguel Martin; and CFO, Glen Ibbott. After the market closed today, Aurora issued a news release announcing our financial results for the second quarter of fiscal 2022. The release, accompanying financial statements, and MD&A are available on our IR website and via SEDAR and EDGAR. In addition, you can find a supplemental information deck on our IR website. Listeners are also reminded that certain matters discussed in today's conference call could constitute forward-looking statements that are subject to risks and uncertainties related to our future results or business performance. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect actual results are detailed in our Annual Information Form and other periodic filings and registration statements. These documents may be accessed via SEDAR and EDGAR. Following prepared remarks by Miguel and Glen, we will conduct a question-and-answer session. For retail investors, we have compiled questions submitted to us prior to the call. For industry analysts, we will ask that you limit yourselves to one question and then get back in the queue. With that, I would like to turn the call over to Miguel. Please go ahead, Miguel.

Thank you, Ananth. We are pleased with our transformation plan and we're tracking with adjusted EBITDA of profitability in the first half of fiscal 2023. That's less than a year away. Here's why. First, we remain the number one Canadian LP and global medical cannabis with strong sequential sales growth and margins exceeding 60%, roughly twice that of our competition. We continue to see growth in the number of countries including the UK, Israel, Australia, and Poland. And our experience and process driven approach is roar a leg up to profit from the significant opportunity. Second, and this is great news, we continue to rationalize our expenses to the current environment and manage the Company with far greater efficiency. In Q2, we achieved the annualized run rate savings of $60 million. That is nearly double the 33 million the reference back in November. And I'm pleased to report that we now believe that we will achieve the higher ends of our targeted $60 million to $80 million savings annually by the first half of fiscal '23. Importantly, none of these cost savings will impact plan growth investments. Third, our balance sheet remains one of the strongest in the industry, and we continue to be smart in allocating capital. Moreover, our capital structure supports both organic growth and provides us with the resources to evaluate strategic M&A. Fourth, we recently launched our science and innovation business known as OCO, which we intend to use to deliver a continuous stream of innovation to the market. This business already has one of the largest catalogs of high quality and high potency genetics, and IP and biosynthesis available for licensing. We've already commercialized several cultivars with other LPs, as well as long as 300 our own San Raf brand. We currently have more than…

Thanks Miguel. Good afternoon, everyone. I'll now review our fiscal Q2 2022 financials. These results clearly demonstrate the inherent strengths of our business model and how well we are executing our transformation program, which is ahead of schedule. So let's begin with a few key highlights. We have one of the strongest balance sheets among Canadian LPs, including approximately $445 million in cash as of yesterday, no term debt and access to a $1 billion shelf perspective. This perspective includes a $300 million ATM, from which we have recently drawn down nearly $90 million, meant to position us to take advantage of strategic M&A opportunities in the future. Our cash flow continues to improve with $20.3 million used in operating and working capital in Q2 compared to $67.3 million in the same period of last year. And we continue to progress towards our EBITDA positive milestone, reducing our loss this quarter by over 20% from last quarter to $9 million, as we begin to see the cost savings from our business transformation plan flowing through the P&L. In short, we have more than sufficient cash on hand to fund operations and we are moving closer to profitability. Q2 net cannabis revenue was $60.6 million, a slight increase from last quarter. Net revenue would have been 4% higher, but was reduced for $2.4 million provision reflecting past and current international shipments that had batches of outside the targeted potency range. This provision is not expected to recur right. Our leadership in medical cannabis continued to deliver a robust overall group along with consistently strong margins about 60%. This enviable margin profile has held steady over the past few quarters, and just the key gross profit driver for our business to both distinguishes us from our competitors and is critical for us…

Thanks Glen. Before Q&A, let me share some final takeaways. Aurora is laser-focused on EBITDA profitability and long-term growth, and we're making significant progress on both. First, we are getting to the high end of our cost reductions, which is great news and our medical cannabis revenue growth globally shows tremendous promise given our regulatory expertise and the trend of medical converting to rec. In Canada, the rec market will eventually correct, likely with fewer players, which will provide us added opportunity. And our science and innovation program adds another capital-light opportunity to our portfolio. Lastly, our balance sheet is in the best place it has ever been, which positions us for continued organic growth and strategic M&A, and the transformation plan is firmly on-track. We appreciate your interest and time today, before we take questions from analysts that cover our stock, I'll turn the call over to Ananth so he can ask a few questions from our retail shareholders. We're invited to submit questions. Ananth, please go ahead.

Thanks, Miguel. Our first question is regarding the stock price. What are your plans to improve the stock price and perhaps reassure shareholders?

Well, I mean, obviously it's a question we get a lot. I think first and foremost, you got to go back a little bit in time and understand that there was incredible exuberance about the growth of the global cannabis business that starts with the U.S. We have been saying for a year that the U.S. is a ways off. We also believe and strongly, and I spent my entire career working in the U.S. with regulated agencies that, it's going to be a medical focus, with the FDA regulating the product with decriminalization, and then we'll see a pathway towards RAF. That's what we are seeing in other markets and we'll see it there. Canada, and the challenges in Canada around the rec business, I know many people are incredibly focused on the rec business as opposed to the medical business, which I'll talk about in a second. But the rec business in Canada is only three years old. You've got roughly half of that business is still in the legacy market and you've got in your rational marketplaces we've spoken about. There's 250 LPs today that's twice as many as they were a year ago. You've got excess inventories and people having negative gross margins on key products. That's not sustainable and now it's going to turn around. We quicker than almost anybody else, right size that rec business so that we can be in a situation to not have that overstepped incredible success that we've had in medical. So I think first and foremost for investors, is really focusing on the long-term versus the short-term. And the long-term for cannabis is incredibly bright. If you look at key markets, such as Germany and France, and UK and Israel and on and on and on. Those are big markets where you're seeing medical cannabis grow in significant place. Also, you're seeing the same companies win time after time after time. Secondly, we've done the things we said we were going to do. We are focused on shareholder value. We're focused on being profitable. And this was another good quarter making progress. The EBITDA progress was a 22% improvement over last quarter. And we are reaffirming the guidance to be EBITDA positive by the second half of our fiscal 2023. And things that we've done are setting up for shareholder value in the future. We've talked about the balance sheet. We've talked about the cash position. And we were properly allocating the capital to high growth, high margin opportunities. And lastly, when you think about long-term benefits, Aurora has significant assets that haven't been monetized yet. IP, bio synthetics, genetics always plays a significant role in agricultural products all around the world. So, I understand the question and I understand the history, but I think if you look forward and take a longer view, you see that there are a lot of things traditionally that you look at most companies that Aurora has.

Our next and last question pertains to our path to profitability, Miguel. What gives you confidence that we're on track to meet our stated EBITDA timelines?

Well, I think anytime, you're looking at a company and seeing if you believe what they're saying is what they've done. And if you look at our history of announcing additional 60 million to 80 million in cost efficiencies, we're already at 60 million and we're really commenting today that we're going to be a high side of that. Secondly, is there progress been made so far, EBITDA does not, positive EBITDA doesn't happen overnight, and we've made progress once again, this quarter. When you look at aspects of what would be a drag on that projection, we quickly moved out of those less than profitable areas, such as key components of the adult rec business in Canada, markets that we may have participated in, that didn't have upside, and yet still found, the cash and the investment to do innovative deals, such as the Growery in Netherlands, where even now legally we can have a majority position, we can consolidate and recognize revenue as early as 2023. So we're on track, we demonstrate that what we say we're going to do we do and I think, you know, we're always keeping the shareholder in mind as we make key decisions.

That's great. Operator, that concludes the retail Q&A session, you can turn it over to you to open up to the phone lines.

Thank you. We will now open our question-and-answer session on the phone. [Operator Instructions] Our first question comes from Vivien Azer with Cowen. Please state your question.

So I wanted to focus on medical and the supply appear very strong results, but in particular, your Canadian medical business, Miguel, the call outs during the prepared remarks around the benefits of insurance coverage were really interesting to me. And I would love for you and Glen to expand on that, so one question in two parts. First, can you just level set on the scope of insurance reimbursement as it stands today? And then part two. What the opportunities to expand patient coverage or reimbursement standpoint?

First, I'm going to talk more of sort of macro level and I'll address your point on opportunity. I'll let Glenn walk you through the reimbursement numbers, the percentages and sort of the key stats, and we can obviously follow-up for all about key components in that. In medical business in Canada, it is a really good business. And again, with my people, I know it's a bit older than the rack business. But it really is starting to develop sophistication. It really is a DTC business is a direct-to-consumer. And we've done a lot of things that I think most people would expect, out of a customary DTC business, but it's harder to do in medical cannabis. And all of these things have really been focused on not only increasing the basket size, but also acquiring new patients. And while all of our overall revenue is flat, as we mentioned, we grew market share. We have almost a 23.5 market share today of the medical business up to '19, that's closest is half of that. And after that, it gets pretty dilutive. First and foremost, we've added significantly to the portfolio of products and premium products. And we have found that our patients are particularly interested in premium cannabis products. I think most people would understand that with medication, but it's coming a little bit later to the overall cannabis business. Secondly, the service for not only the patients, but the clinicians, and the physicians has consistently improved. And so when you look at that, there are a lot of reasons to think that we will continue to grow share in that critical category. The other two points I'll make on that is that the infrastructure to service the medical patient both acquire, retain and move through that process…

Thanks, Miguel. Yes, it's a great question. Like, first of all, I'd say a minority of our patients do the majority of the ordering and deliver the majority of the gross profits and there are the reimbursed patients. Now, there is a significant portion of our patients and if we've got the highest number of veterans and first responders in the country and their critical group. Obviously, this is a really important medical treatment for them, if you dealing PTSD, whether it's you've been in a war zone. You've been in the front lines of healthcare or in the front lines of policing. This is a really important treatment for you. Through some of the coverage programs that some of these folks qualify for, they are reimbursed and what we're working on is that is direct reimbursement. They reimbursed for up to high single-digits per gram on cannabis. And so, they become a little less price sensitive and much more city in getting the right medicine, which is a really critical component of this. So, I think they are great group. It's an important treatment for them, but strictly financially, they really drive repeat orders at high average dollar per gram. For the growth that Miguel was alluding to, we have told you in the past that we've invested in technology to support our medical business. This is a key part of it, as employee or employer benefit programs, and some of the insurance providers that run those programs, offer us medical cannabis as an option. And they do under health spending accounts. We have got the infrastructure now to connect directly into their system. So, a patient can order medical cannabis, not have to go out of pocket on it and be directly covered through the insurance program, through their work. So if you add $500 a year through a health spending account or alternative treatments account, we've become positioned as I'd say a supplier of choice. So, that's an opportunity for us to continue to work on the reimbursed or the insured patient group, which we think probably provides the best stickiest, highest value patients, and also quite frankly, near and dear to our hearts and that we actually are making a difference in their lives. Thanks for the question.

Thank you. And our next question comes from Michael Lavery with Piper Sandler. Please state your question.

Thank you. Good evening. You've touched before on how medical and international medical is attractive in part because of the high margins and price points. Can you help me reconcile, you talked about international sales were up 24% sequentially in the quarter, but then your companywide average selling price was down 10% sequentially. Was any of that pressure from international or what are some of the pricing dynamics there? How should we understand what that looks like?

Yes, Michael, the pressure was not international, it was domestic. I'll let Glen walking through the numbers, but we had pressure from some opportunistic wholesale selling which as opposed to destroying product, we sold it at a very low point. We also had some pressure in the rec business. And some of that was offset by mix. But the international margins are really haven't moved at all and they're incredibly strong. And so that's not there. I mean the reason why, and I'm always surprised, there's not more interest in it. Medical cannabis is the fastest growing segment of cannabis internationally. And you're seeing huge markets really being put on the path of thoughtful, legislative process to bring cannabis forward. And we don't need a list of all the countries were in 12 countries and some big ones. And the margin setup because it's really medications and run through a federal contract does not have the same market pressures, and clearly is a much more of a challenge the end of the business. So I mentioned that a year ago in Canada, there are 125 LPs, today there's 250, there's only a handful of cannabis companies that can meet the incredibly strict requirements internationally. In Germany as an example, you have to be within 10% of specs both potency and top levels. And people will say, well, excuse me, that's pretty broad spec but it's not when you have like a balanced product that only has a 10% THC number or 1% variance on an agricultural products on a core item it is really hard. So international is where the growth is, international is really hard to do well. Same companies are winning time after time. The margins are great. They're not moving. And you're seeing steady progression and a consistency in how the countries look at it. And Glen anything I missed on the margin.

No, great talking about the margins or insights into the margins on. Mike, specifically about average selling price, yes, there's a little bit of pressure in the consumer market. Our average price in our Canadian medical market came down as we sort of proactively adjusted a couple of key products down to that that reimbursement level I talked about just to make sure that there's no impediment to these first responders and veterans ordering. So, it actually picked up the velocity, even though the ASP was down slightly on overall. Internationally, listen, we had some very high ASP markets come on this quarter. But the Israeli sells are bulk sales. And so, the way they show up in our average selling prices, they may actually look like they're decreasing ASP, but the margins are extremely high because they're just shipping a big bale of cannabis. There is no postharvest handling. There's no bottling again in that stuff. So margins great even though the average selling price per gram, if your well is, is down. And I think you know, it's a great question because I think in the future we'll have to fill out a little bit for you to give you the transparency on the impact of large international bulk sales in our ASP because quite frankly, if we pull that out, you'll our ASP going up.

Thank you. Our next question comes from Pablo Zuanic with Cantor Fitzgerald. Please state your question.

Just along the same lines in international markets. Can you talk more about the stickiness that you're talking about right? Because when I hear about shipments to Israel, I wonder you know that buyer they're good switch to another supplier next quarter, right. I'm sure they're going to buy from Colombia yet to regulatory issues but, so I won't understand the control that you have of the supply chain there, whether, are they selling your brand? Do you have your own sales people on the ground? Or you're pretty much you are cheaper shipping from Canada and they take control of the value chain, because that means that he will not be so sticky. And then the second point, when you talk about this unique ability to navigate complex regulatory environments and floating from press release. That sounds great, but it's in Germany, when only 0.1% of population of patients. I wonder, how unique is that really? I mean, I suppose other companies, as domestic patients grow in Germany will also have that skill set, if you're going to expand on those two points? Thank you, Miguel.

Sure, we are happy to. Israel is unique, and that I've spent a lot of time with that situation. So what you have today in Israel is, you've got roughly a 100 local growers, including growers that are on the combusted, and they hold really an outsized political influence. And the situation Israel right now a country of 9 million people in a tremendous hub of all things. Cannabis right now is that locally, they've not been able to grow the quality of cannabis that they need in that market. And it's a very high margin market. I mean, a 10 gram increment is going for about 360 shekels. So Pablo, what you're referencing is the least sticky of all the markets. And why is that? Because right now, Canadian LPs and others that can meet the spec. Now the spec is incredibly hard to meet. CUM CS, the IMCA, which is the regulatory agency in Israel, a very thoughtful agency, led by a wonderful man, name Yuval Anchat, has created what may be one of the strictest of not the strictest barriers to get into pesticide testing that no one else sees. But if you can meet that standard, you can get your product in and import permits goes through of hot and cold. And because cannabis is so hot right now, there's not a lot of brands, what I would call equity. With the possible exception of a local grower such as maybe InterCure, I'll let you benefit something like that. But there's not that much stickiness for the Canadian LPs because the brands haven't developed themselves if you can meet the standard, you can get your product in and because there's such demand, you can get there. I think over time, Israel will get stickier. I also…

Thank you. And our next question comes from Andrew Carter with Stifel. Please go ahead.

I wanted to ask, so you said -- so I guess, instead, I want to ask about the Canadian consumer business. You've reiterated the positive EBITDA. What does that consumer business have to do? Does it have to stabilize, or conversely, could you just go with a 100% medical focus? And would you be able to -- with some incremental savings and be profitable?

Great question. So right now, as we mentioned, the Canadian rec business is completely irrational. You're seeing core SKUs that are selling a significant negative gross margin you're seeing exceptional amount of over inventory and you're seeing a situation like with Quebec right now with the vaccine mandate where you're seeing 16% to 20% drop in sales. So it's a weird market. I talked about the 250 LPs that are there. And so then the question becomes, why stay in it. And I believe, and we were one of the first companies who recognize that overall market share was not the arbiter of success in the Canadian rec business. It's the share of the profit pool, which is something I was always trained. The issue in exiting the rec is that there are other ancillary benefits that we opt out. So I want to stay in the rec business, albeit at a proper size for a couple of reasons. First, it's going to get there. It might take 9 or 12 months, but it's not sustainable. And when that happens, it's going to be for a smaller group of companies, and we're going to be in a really strong position. Secondly, that experience in the largest federally regulated rec market is invaluable in other places, i.e., in the Netherlands where we're going to be going into a rec market there and at some point in the U.S. And there are a lot of learnings that you only get by staying there. It's only four years old. We've talked about that. And also when you think about the market potential, there is going to be a slowing of that legacy market. Right now, the legal market represents 53% of sales and the legacy market is 47%, that continues to move. And I think with all of that, there are still some places where you can find some profitability, premium flower, concentrates, extracts and all those make sense. The other point is we got efficiencies from being able to share products, share facilities, share regulatory, share genetics and some of that overall fixed overhead for our medical business by having at least some of the rec business. Now right now, we have roughly a four share of the rec business. It's about right. I think share of profit pool is more important. So those are all the reasons why you just don't get out of it, but you don't chase unprofitable share, and you don't rent unprofitable share, and you use your resources to spend against growth areas which for us is Canadian medical and, more importantly, international medical.

Our next question comes from Frederico Gomes with ATB Capital Markets. Please state your question.

Thanks for taking my question. I just had a question on your ATM. So you guys finished the quarter with over $200 million in cash. You have one of the strongest balance sheets in the sector. So could you just provide some more color on the rationale for raising that much money after quarter end? Do you have any specific use in mind for those proceeds? Is it M&A, or was it more about building that war chest further?

Sure. Frederico, essentially great question. so just a couple of things. I want to tack a point on to your question. First, I also want to highlight that we also bought back about $20 million, $20.5 million of convertible debt. That was, I think, important for us, and we're going to continue to be opportunistic when we can do that, we bought it below par and we'll continue to monitor the convertible market. Why is that important as you mentioned the balance sheet? And as I talked historically, just to go back in time, when I first got in the seat, I thought it was critically important that the Company had a proper cash position to really be there and sort of weather the storm of this whole situation. And clearly, we did that. You mentioned the specifics of us raising it to over $440 million, and what we've said previously on the restate, so it's going to be a bit of an unsatisfying answer for you, Frederico, but I think it will get to it. We consider the ATM to be utilized for strategic purposes. We're always looking for deals that are accretive on EBITDA basis. Everything that I'm focused on is the sustainability and the focus on this being a profitable and sustainably profitable company. And so that EBITDA is always important. And so the cash is also looking at significant strategic or operational upside. This is an important line, and I know people always want to hear it, but I think it's important for people to hear from me constantly. We do not expect to use any of the cash from our ATM program to pay for the day-to-day operational expenses of the business. We're in a strong position today to consider strategic M&A. But I think our restraint, particularly as it pertains to the U.S. should give shareholders a good indication. I mean the valuation of assets that people have purchased in the U.S. are a fraction of what they were a year ago. So we're cautious into that, and we're going to continue to be sensitive to purchase price valuation and always making sure that there's a strong strategic rationale and any potential target. But things are moving fast. We want to be able to be opportunistic, and that's really why the cash position currently.

Thank you. Our next question comes from John Zamparo with CIBC. Please state your question.

I wanted to ask about the new science program and your ability to license genetics and IP to others. And specifically, have you started monetizing this to date? And if not, when do you take that might happen? And could you give us a sense of how material that might be for the business?

Sure. So John, it's a great question. We have started to monetize it, albeit in a small way, and we expect that to accelerate. So let me give you some specifics around that. First, you saw the announcement about our biosynthetic assets and the partnership with Cronos. We're thrilled about that. We believe that we have the most efficient pathway as it pertains to biosynthetics, those IP assets pertain both in the plant and outside the plant. So there were -- there was compensation connected to that. Secondly, we have had some small deals with some smaller craft companies. We announced North 40, which is an extremely well-known high-quality craft grower, which we sold genetics under the cultivar named Farm Gas. We utilized that both as a sale as well as a marketing tool, and we're now selling farm gas into the San Rafael. We'll continue to announce the sale of genetics. We believe we have the -- one of the largest, if not the largest genetics library and many, many people are looking for high-quality, high-potency genetics, and so we'll continue to do that in a variety of different ways, and I think you'll see that. We also have the ability through our facilities to grow for others and economic scale, and so we'll continue to do that. So the short answer is we've had a couple of deals. If you look at other folks and you look at the people that we brought on to staff up OCO, they come from other categories where it's clearly a relevant and material piece of their overall financial profile. And clearly, the margins are -- will be significant given that we've already made all those investments. So that's where we are today, a lot more to evolve. We'll continue to announce deals, both large and small as they come out. But genetics will be a big piece. The only thing the other piece I'll add to that, John, is there is a misconception, let me say, amongst growers and LPs, both domestically and internationally, that you cannot protect or own the genetics around, in particular, cultivar. That's completely untrue. And so we are licensing unique genetic markers of these cultivars that we develop, and we are able to identify those that are infringing upon that. And clearly, the law is very clear on this issue, and we'll have a very strong case. You'll start to see litigation around that as well as those that we believe have infringed on some of our biosynthetic assets, and that's also an additional revenue stream for the Company.

Thank you. Our next question comes from Tamy Chen with BMO Capital Markets. Please state your question.

I was just wondering, at one question on the consumer business. Your volumes, I think the press release said was down 18% sequentially. And I'm just thinking back, I think the last two, maybe three quarters, your consumer business was holding in decently. So I was just wondering if you could elaborate on what drove the 18% sequential decline in volume?

So Tamy, I think the simple answer is we're not going to chase. You're seeing an acceleration of irrational pricing, particularly on discount flower, and we've made the determination that we're going to get out of certain categories that don't make sense and lose money, and we're also not going to chase. So if you look at the ASP, and I know you follow all that, and you can see your body day or headset data, the average pricing, you've seen that dramatic decline across some key categories, particularly in the value segment. And so again, overall market share is not as much of a focus for us. So we're going to really spend most of our time in looking at those categories that are problem where there's margin, but where we see certain categories where it's single digit or in certain provinces like Ontario where you see negative margins, you're not going to get there. And because that accelerated in the quarter, and we didn't chase that's why you'll continue to see that. Listen, if people want us to sell a lot of cannabis and lose more, I think we're the wrong company. I'm not saying that's what others are doing, but it is going to take a bit longer for these inventories to rightsize, and in that place, I think you see a lot of folks willing to sell stuff at a significant loss as opposed to just taking it out or giving it away.

Tammy, I'll just add -- just second to that. I said in prepared remarks at San Raf, I mean in using it as an example of investing in the right places. San Raf is quite profitable for us. And we saw an 18% increase in pre-rolls and flower over the last two quarters because we launched some nice new cultivars into that. And as Miguel stated in his remarks, we've got a lot of innovation coming, a number of new cultivars under a bunch of different brands and then profitable category. So we're focused there where the profit pools are. If that means market share going away, fine, but gross profit is what's going to drive us to profitability overall, and that's our focus. So I think we're trying to get away from that, what's the market share and what's happening on the revenue side and really focusing on driving in the areas -- winning in the areas that allow us to be profitable in the Canadian consumer market and add that to the existing really strong portfolio we've got in the medical market and create quite a company here.

Thank you. Our next question comes from Glenn Mattson with Ladenburg Thalmann. Please state your question.

Hi. Thanks for taking the question. So just building on some of that stuff on consumers. So you talked about why you want to be there for a variety of reasons or for when you move into new markets or where the market turns around. But more maybe to the one of the second parts of Andrew's question was like, can you give us some sense of like how you see that market just kind of shaping up over the medium term? I know it's maybe irrational now, but you lay out kind of the idea for profitability in fiscal '23, first half in your forecast that you have internally, do you have that segment kind of growing or still shrinking, or what's your general sense for for how long that this continues?

Sure. So Glenn, I think first and foremost, let me highlight the critical province for Canadians is Quebec. They have a vaccine mandate in order to go in either an alcohol store or cannabis store and sales in Quebec are down 16% to 20%. Now the province is indicated by the end of the month, some of that stuff will be listed. So the current market is continued to be impacted by COVID. And obviously, the LPs also have impacts because of labor. Short term is defined by the next three to six months. You're seeing an acceleration of pricing downward. You're seeing that in discount flower. You're seeing that in vapor. You're seeing that in a lot of the core segments. As Glen mentioned, there are bright spots, premium flower is holding up and concentrates and resins and rosins and things like that, there is still decent margin to be made as defined by, I don't know, 35%, 45%. And I think this market given we just went through the harvest and a variety of different things, I think you're going to probably see this go on for the next 6 to 9 months. And it will only be with the absence of capital, which we're starting to see for some of the midsized to smaller LPs and with some repricing. But again, 250 LPs, 125 a year ago, that's a bit of a challenge. There's really no barriers to entry. Now I would also mention that the provinces are making some subs and changes. We've been encouraged by what we've heard out of the interim CEO of the OCS, Steve Lobos, Good Guy about where Ontario is starting to go. We are seeing some acknowledgment about some different aspects on the retail side that will create a bit…

Thank you. And that's all the time we have for questions today. I'll turn the floor back to Miguel Martin for closing remarks.

Well, first and foremost, let me thank everybody for taking the time and the coverage that you provide to our stock. We really appreciate it. We're really pleased with the quarter. Once again, we've put a plan out our transformation plan has three key components, which is growth in the markets where we can make money, particularly in medical. We've done that, focus our cost structure on the opportunities as they present itself, and we've done that, raising our guidance on the $60 million to $80 million, and three, everything we're doing focused on being sustainably EBITDA positive, and you've seen that progress with the 22% compression from last quarter to this quarter. So we really appreciate it. I hope everyone is safe and well, and I look forward to seeing people in person in the near future. All the best.

Thank you. This concludes today's conference. All parties may disconnect. Have a good evening.